According to the general rule explaining apparent authority, if the behaviour of a principal gives reasonable grounds for the third party to think that the principal has appointed the other person to be his agent, contracts concluded by the third party in the principal’s name shall be binding on the principal, notwithstanding the fact that the agent was not authorised by the principal to conclude particular contracts. In the absence of evidence of apparent authority the agent shall have to redress (...) the damage incurred on a third party in cases where the third party was not aware, and was under no obligation to be aware, of circumstances that the person acted in other person’s name without their express authorisation or in excess of their authority. The principal shall be liable for actions of the apparent agent if the following three requirements are proven: words or conduct of the principal caused the impression of authority; third party could reasonably presume the existence of sufficient authority; third party acted in good faith. The third party’s legitimate expectations must be aligned with the principal’s will in order to apply the doctrine of apparent authority efficiently. (shrink)

Each developed economic system is based on the principle of division of labor and can’t be imagined without the delegation of certain powers to agents. Any economic activity, particularly carried out through legal entity, is not able to function without the party’s right to authorize other persons to negotiate and make contracts on behalf of the principal. Due to the complexity of the economic order it is sometimes difficult to a third party to ascertain whether the agent acts with authority. (...) Therefore legal regulation expands the scope of authority of the representatives beyond the actually granted powers—often the need to check the credentials of the representatives is rejected, when it is obvious from the facts that they have been granted necessary powers. (shrink)

The article “Outline of article 5 of the OECD model Convention” is written on a relevant topic, which is important because the object of analysis has many meanings. The author analyzes the concept of permanent establishment, provided for in Article 5 of the Organization for Economic Co-operation and Development Model Convention with respect to taxes on income and on capital. The main goal of the article is to discuss the institute of permanent establishment and to help understand it better. The (...) author does not seek to provide a thorough analysis of the content of Article 5, but rather, to concentrate on its main aspects. Even though the study of permanent establishment, provided in this article, related only to the context of the Convention, it can also be useful while analysing the concept of permanent establishment under the US Model Income Tax Convention and the 2001 UN Model Convention. (shrink)